Consumer Credit Rises as Credit Card Use Falls Again

Consumer Confidence
Matt Rourke/AP

WASHINGTON -- Americans cut back on using their credit cards in September for the fourth straight month but boosted borrowing in the category that covers auto loans and student debt.

Consumers increased their borrowing by $13.7 billion in September to a seasonally adjusted $3.05 trillion, the Federal Reserve said Thursday. That is a record and follows a gain of $14.2 billion in August.

The increase was driven entirely by higher borrowing for auto and student loans, which rose $15.8 billion. Credit card debt fell $2.1 billion following a decline of $885 million in August.

The string of declines in credit card debt will likely hold back consumer spending, which accounts for 70 percent of economic growth.

The measure of auto loans and student loans has risen 8.5 percent from a year ago and has increased in every month but one since May 2010. But credit card debt is essentially where it was a year ago. And it is 17.2 percent below its peak hit in July 2008 -- seven months after the Great Recession began.

Slow job growth and small wage gains have made many Americans more reluctant to charge goods and services.

But at the same time, the weak economy is persuading more people to go back to school to learn new skills.
The Federal Reserve Bank of New York quarterly report on consumer credit shows student loan debt has been the biggest driver of borrowing since the Great Recession officially ended in June 2009.

Analysts had hoped that consumers would step up spending and help drive faster economic growth in the final three months of the year.

But a partial government shutdown in October lasted 16 days and left thousands of government workers temporarily without paychecks.

That disruption is expected to hold back growth in the fourth quarter. Many economists believe the overall economy is growing at a rate just below 2 percent in this quarter, down from growth of 2.8 percent in the July-September quarter.

The Fed's borrowing report tracks credit card debt, auto loans and student loans but not mortgages, home equity loans and other loans secured by real estate.

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I to are using plastic less, paying off balances and stashing them back for a "rainy day". I grow tired of the transfer of wealth from me to the banks, energy scums, day traders, insurance companies, hospital corporations, commodity markets and many others. THEIR SCAM GAME IS OVER. CONGRESS, WAKE UP BEFORE IT'S TO LATE......

November 08 2013 at 6:16 AM Report abuse rate up rate down Reply

. . . student loans are up because people know they can borrow that money with little worry about paying it back . . .

November 08 2013 at 5:38 AM Report abuse rate up rate down Reply
Phil Collins

This Holiday Season will be bleak as Health Care cost rise Fast and Furiously as the Economy just limps along. Low paying jobs are a big reason to as America sent it's good paying jobs overseas. Just look around you at the vacant store fronts that all use to be filled 5 or 6 years ago.

November 08 2013 at 5:07 AM Report abuse rate up rate down Reply

Mine are all paid off, and of course they offer a lower intrest rate. SCREW THEM.

November 07 2013 at 10:10 PM Report abuse +3 rate up rate down Reply

Less credit card use is the result of greed and stupidity of those that issue them. With Fed policy keeping interest rates at near \"0\", why would anyone want revolving credit that starts at 12%? I have ones that charge up to 24.9 - and yea - I do use them. However, they are paid in full each billing cycle. I did not stop using mine - just stopped running any balance as they do have advantages with purchase guarantees and transaction receipt. Int. should be in the 6-7% range for those with excellent credit and they might do more business.

November 07 2013 at 9:23 PM Report abuse +4 rate up rate down Reply

For all intents and purposes, a 1978 Supreme Court decision made the credit card issuers exempt from state usury laws. You try charging 29.99% for a loan and see what happens.

November 07 2013 at 9:00 PM Report abuse +4 rate up rate down Reply

Also,,Pay back some of my railroad retirement the government borrow and knew they would never pay back,!!!!!!

November 07 2013 at 7:13 PM Report abuse +2 rate up rate down Reply

People aren't using credit cards because they don't have them anymore along with the house.

November 07 2013 at 7:13 PM Report abuse +5 rate up rate down Reply

Maybe Congress and Senate should pay back what they borrowed from social security all these years and we would not be in the mess we are in.

November 07 2013 at 7:05 PM Report abuse +8 rate up rate down Reply

I have been getting existing credit card notices that the interest rates they charge are going up to as much as 23 and 24%. So, They are paid off and I am cutting the card up. It is completley assinine and they can keep there money. There is absolutley no reason to justify those kinds of increases and their sales will see it.

November 07 2013 at 7:03 PM Report abuse +7 rate up rate down Reply